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Going Abroad? Prepare your money plans in advance.

npritchard@monetagroup.com (Nancy Pritchard) — Mon, 20 Aug 2012 17:37:11 GMT

Traveler’s checks are somewhat ‘old school’ these days. They can be difficult to use and may not be accepted in some places. However, there are number of options available to ensure you have cash or credit when traveling. A little personal research is recommended because everyone’s spending habits and cash needs are different, and the options you already have — credit or debit cards — may be sufficient.

When traveling overseas, it is handy to have some local currency upon arrival — for taxis, snacks, tips, etc. — but converting more than a few dollars before you go may not be the best option. A wiser policy is to use an ATM card while traveling, taking out local currency in smaller increments as needed. The use of credit cards in most cities is simple, but many businesses use the chip-PIN system. You may need to get a card that contains a chip — common in Europe, although not in wide use in the U.S. This is especially important for toll fees, purchasing tickets in train station kiosks and the like. From a recent article by Michelle Higgins in the New York Times:

Like many Americans who have tried to use their credit cards in Europe, Elliot E. Porter, a historian from San Francisco, has encountered his share of payment headaches. Perhaps the most aggravating occurred a few months ago at Amsterdam Centraal Station, where he learned only after waiting in line to purchase train tickets that none of his credit cards, which include a MasterCard, Visa and American Express, would be accepted. The problem? They rely on magnetic-strip technology rather than embedded microprocessor chips, which are becoming increasingly common outside the United States.

For ready cash, relying on ATMs is simple, and they have instructions in English. Yes, you’ll pay fees, but traveling with large amounts of cash can be hazardous: Pickpockets are a common woe in some European cities, and lost cash is lost. You risk little chance of getting stuck without cash: ATMs are plentiful. The article here, by travel expert Rick Steves, is a comprehensive summary of Money Travel Tips. http://www.ricksteves.com/plan/tips/money-travel-tips.htm

If you want to convert dollars to euros or other foreign currency prior to your departure, check first with your bank. Locally, Commerce Bank, Bank of America and US Bank — and perhaps your bank — can supply foreign currency. BOA and Barclay’s (in the UK) have an agreement that will allow you to withdraw cash at Barclay’s ATMs without paying additional fees (although there will be fees based on exchange rates). US Bank has Travelex, and although its exchange rate is higher, it does not charge fees on cash withdrawals (which may be a better deal if you plan to take a large amount of cash with you). Some currency exchanges charge a percentage on the total amount of cash exchanged, which may be considerable, and taking a large amount of cash is usually unnecessary. Before making a decision, be sure to ask about exchange rates and any additional fees.

Educate yourself regarding the most current exchange rate: 500 American dollars equaled 412.065 euros on July 25. Calculators are available online. The credit card foreign transaction fee is generally the combination of a fee that your network (e.g. MasterCard, VISA, etc.) charges to handle the transaction between the overseas merchant and your credit card issuer, and a fee that your credit card issuer (e.g. Bank of America, Citi, etc.) charges on top of that. And some credit card companies charge high exchange rates — as much as 7 percent. Inquire to make certain you know what the costs will be for using your credit card abroad — exchange rate plus fees.

Always notify your credit card provider when you will be using your card overseas. Unusual purchases or unexpected locations will send up red flags, and your card may be declined — a real inconvenience and a hassle to reverse — especially if your cell phone doesn’t work in Europe. (Actually, notifying the credit card company of any travel dates is often wise, as your card may even be declined in the U.S.)

Consider an international debit card or prepaid credit card. These are available from many banks and credit card companies. They may include the ‘chips’ being used instead of ‘strips’ in European (and other foreign) countries. Securing one of these cards prior to travel can prevent headaches during your trip. Servers, merchants, etc., bring the PIN machine to you, rather than taking your card to the machine, so you always have possession of your card. With prepaid cards, the chip and PIN are not tied to your personal information, so if lost or stolen they cannot be used by anyone who does not have the PIN. If traveling with a companion, consider a separate, prepaid card for each of you; if one is lost, you will still be able to use the remaining card, as each has a unique PIN.

There are some downsides: You don’t get to select the PIN because they are embedded in each card and can’t be changed; and as they are ‘prepaid,’ you can’t spend more than the amount on the card, so think carefully about how much you need. If you return with money left on your card, you may be able to convert it back to dollars, likely at the same exchange rate, but check with your provider to be sure.

If you use a credit card for money exchanges, your credit card provider will likely consider it a ‘cash advance,’ so make sure your card allows a high enough limit on the amount you can advance, which is usually very different from your credit limit. Searching the Internet for ‘best credit cards to use in Europe’ revealed interesting details and, hands down, the most recommended (and cheapest) card — by those having no stake in the company — is Capital One. Why? Capital One doesn’t charge ANY foreign transaction fees for any of their credit cards. There are a number of other options — such as American Express Platinum — but if you’re thinking of getting a new card simply for foreign travel, look at the options offered by Capital One.

More from Michelle Higgins in the New York Times:

For backup, also consider carrying a preloaded debit MasterCard from Travelex called Chip and PIN Cash Passport, available in pounds or euros, which is equipped with the embedded chip. But use it only when you can’t use other cards. While it does not cost anything to use the card, the exchange rates you’ll get when loading it with cash aren’t great. For example, in late May, the exchange rate when putting funds into a Travelex Chip and PIN card online was about $1.50 to the euro. (It can be higher in actual Travelex stores.) By contrast, the spot exchange rate, charged by most banks, was roughly $1.42, according to Bankrate.com, a financial research site. Even after adding the 3 percent foreign exchange fee typically charged by major American card issuers, it was still more expensive to use a Travelex Chip and PIN card.

That said, there are some transactions — like buying train tickets at kiosks — for which you will need a Travelex card; remaining funds can be converted back to dollars after your trip.

Travel is exciting, but it can be challenging when things go awry, especially with finances. I was once robbed in the south of France — credit cards all gone — and getting the mess straightened out was a daunting process, although I had use of a French cell phone, which really saved my sale de fume! If you are not an experienced international traveler, your holiday will be enhanced by making money plans well in advance. The research is all part of the fun!

Property and Casualty: Overlooked, Underinsured and (possibly) Over-insured

mflynn@monetagroup.com (Maureen Flynn) — Mon, 16 Jul 2012 16:57:32 GMT

by David Curtis, CFP®

An overlooked—and sometimes neglected piece of our financial armor—is homeowner’s, personal property and auto insurance. Without some urging, even some Moneta Group clients might overlook this key piece of their financial plans. It’s hard to consider the unthinkable: suffering a potentially disastrous event that could derail all your carefully made financial plans, but this form of risk management is an important part of every comprehensive financial plan.

A Closer Look at 401(k) Plan Loans

mboggess@monetagroup.com (Meredith Boggess) — Fri, 04 Nov 2011 15:48:49 GMT

High unemployment, rising credit card debt, restrictive lending and a sluggish economy have many people looking for a quick cash option. A research study authored by Brigitte C. Madrian, John Beshears, James J. Choi and David Laibson, “The Availability and Utilization of Plan Loans,” (HKS Faculty Research Working Paper Series RWP11-023, June 2011) reveals that loan provisions are included in 90 percent of 401(k) plans.

Additionally, more than 1 in 5 participants have taken loans from their plans at one time or another and, over a 7-year period from 2002 to 2008, almost half of all participants borrowed from their plans. Based on this surprisingly high use of 401(k) plan loans, an obvious question arises: Is this really a good idea? As with all financial decisions, individual needs and circumstances must be considered. But certainly there are important considerations anyone should understand before taking a loan from a 401(k) plan.

The Ceiling’s Been Raised – Now What?

mboggess@monetagroup.com (Meredith Boggess) — Thu, 20 Oct 2011 13:53:07 GMT

After all of late summer’s anxiety and angst surrounding the debt ceiling debate and Congress’ last minute deal in raising the ceiling, many are wondering how the deal may impact them and what they should do next.

Charitable Gift Annuities

host@example.com (Moneta) — Mon, 01 Aug 2011 15:44:08 GMT

For several years, one of my clients and I have been discussing her charitable legacy. Most recently, we had a conversation about Charitable Gift Annuities, and it occurred to me that others may be interested in this topic.

Baby On Board

host@example.com (Moneta) — Tue, 19 Jul 2011 16:39:31 GMT

My wife, Kimberly, and I have been preparing for our first child, due very soon. Like many expectant parents, we handled the basics: painted the baby’s room, bought furniture, shopped for bottles and bibs and visited daycare facilities. However, because as a Moneta Group Family CFO I spend my days thinking about how families consider their long-term financial planning, we’re also spending time thinking about how our new little one will impact our financial future. I’d like to share some of our financial planning with you and offer some tips that parents (and grandparents) may find helpful during this very exciting transition.

Home Mortgage – Customize to Your Preferences and Situation

host@example.com (Moneta) — Fri, 08 Jul 2011 16:45:10 GMT

With mortgage rates again on the decline, you may be considering a refinancing of your home mortgage. Instinctively, a borrower may be drawn to the 30-year fixed mortgage, seeing it as a great opportunity to lock in a low 4.5 percent rate for the duration of the mortgage. Under many circumstances, this is the right decision. However, for some borrowers, we want to get more creative.

It’s Always Tax Time!

host@example.com (Moneta) — Mon, 04 Apr 2011 15:12:28 GMT

As I write this article, we are approximately one month away from when the Federal government expects our beloved 1040s. In fact, this year we are graced with an extra three days because returns aren’t technically due until April 18, in observance of Emancipation Day in the District of Columbia. Procrastinators, rejoice! You have an extra three days this year!

Spring Cleaning – Document Retention

host@example.com (Moneta) — Tue, 15 Mar 2011 20:02:41 GMT

In the ever-evolving world of technology and electronic capabilities, it seems as though we can do everything with a computer, hand-held device or iPad. We can read e-books, stay in touch by email and Facebook, we can “tweet” and store music, pictures and records electronically. While I don’t necessarily want to make the argument for electronic storage of financial records versus “hard-copy” paper records, here are some general guidelines for how long certain documents should be retained, regardless of the method you choose to save them.

Investment Policy

host@example.com (Moneta) — Mon, 28 Feb 2011 15:23:05 GMT

While watching the news recently, and listening to the so called ‘experts,’ I heard the following statement, “Now is a great time to get back into the market.” This made me stop and reflect on the last three years and how—no matter what the ‘talking heads’ may say—market timing does not work. In particular I thought about the following quote from Winning the Loser’s Game by Charles Ellis:

Missouri MO$T: Now an even more cost-effective way to save for college

host@example.com (Moneta) — Fri, 18 Feb 2011 15:31:00 GMT

On Tuesday, February 8, 2011, Missouri’s State Treasurer Clint Zweifel announced a drastic 44 percent reduction of expenses for ‘do-it-yourself’ Missouri MO$T 529 plans, making it the fifth “cheapest” plan in the nation. This is great news for investors, because lower costs generally mean higher returns.

Planning for Health Care in 2011 and Beyond

host@example.com (Moneta) — Tue, 15 Feb 2011 15:35:41 GMT

Everything we know about health care is changing and likely will continue to do so for the predictable future. As a result of the sweeping health care reform passed by Congress in March 2010 and signed into law by President Obama, several key changes took effect on January 1, 2011. While healthcare reform continues to be a hot topic in Congress, it is expected that repeal efforts will be largely symbolic, and the changes that began in 2011 will continue on course over the coming years.

Retirement Plan Roth Conversions

host@example.com (Moneta) — Tue, 25 Jan 2011 14:35:54 GMT

You may already know that individuals with regular IRA accounts (pre-tax) have the option to convert all or a portion of the pre-tax IRA account to a Roth Account. The benefit of the Roth Account is that, since taxes are paid upon the conversion, taxes are not due at the time of distribution. This means that for qualifying distributions, a participant could receive the distribution tax free. What may be new information is that this same provision is now allowed in 401(k) plans.

Predicting Longevity Via Online Data Sources: Life Insurers are Testing Predictability

host@example.com (Moneta) — Wed, 19 Jan 2011 15:14:26 GMT

As we become more proficient and comfortable using the internet for daily activities—including shopping, social networking and entertainment—it is important to be mindful of unintended consequences. Many of us are now familiar with the fact that employers may screen photographs that job candidates have posted on social networking sites. A New York Times article stated that in 2009, 35 percent of employers withheld job offers after uncovering questionable content. As a result, most users now put more privacy settings in place to eliminate the likelihood of photos and other personal information being used in this manner.

QE2 and Your Portfolio

host@example.com (Moneta) — Tue, 07 Dec 2010 15:25:54 GMT

On November 3, 2010, the Federal Reserve announced its initiative to purchase approximately $600 billion of government bonds through June of next year. The plan is designed to support the continued recovery of the economy, and is the second stage of ‘Quantitative Easing’ (coined QE2) that the Fed has adopted to facilitate the sluggish economic recovery. As the debate continues as to how effective this policy may be on the overall economy, many clients are wondering what this means to them and what affect, if any, it may have on investment portfolios.

Estate Taxes: 2011 and Beyond…

host@example.com (Moneta) — Fri, 19 Nov 2010 15:30:15 GMT

I am continually amazed at how often prognosticators and talking heads prove to be wrong when it comes to predictions about the economy, taxes and all things financial. By now, most people are aware that the estate tax situation in this country is ‘up in the air,’ to put it mildly. Those who love to make predictions said that the estate tax problem would have been ‘fixed’ by now, but instead, nothing had been resolved as of this writing.

To Wait or Not to Wait? That is the Question Regarding Social Security

host@example.com (Moneta) — Fri, 15 Oct 2010 15:37:13 GMT

Two of the most important financial decisions people make are when to stop working and when to claim Social Security benefits. When it comes to deciding when to begin Social Security, there are essentially three choices:

Take it early
Wait until full retirement age (FRA)
Wait even longer

Estate Planning for the Family

host@example.com (Moneta) — Mon, 11 Oct 2010 14:30:16 GMT

For many, estate planning is both a private matter and a gloomy topic—and it’s often something parents and children avoid discussing. These conversations take a lot of courage, and they’re important because they help avoid surprises, encourage better financial planning and promote family harmony.

Long-Term Disability Insurance

host@example.com (Moneta) — Thu, 07 Oct 2010 14:46:22 GMT

What is your most important asset? This question will receive a myriad of answers. Some will say it is their home, others an art collection and others will say it’s their investment portfolio. But let’s assume for a moment that you have not yet accumulated the necessary nest egg required to meet your retirement goals and objectives. In this case, I would argue that your most important asset is your ability to earn income.

Roth Conversions – There is Still Time to Convert

host@example.com (Moneta) — Thu, 09 Sep 2010 15:46:13 GMT

On January 1, 2010, the IRS lifted certain income cap restrictions on converting a Traditional IRA to a Roth IRA. Whether or not to convert is not strictly a black and white issue, and there’s no one answer. Some factors that go into the decision include:

What is your tax rate today? If it is low, conversion may make good sense.
If your future tax rate increases significantly, money converted to a Roth IRA will not be impacted because future withdrawals (if you are over age 59 ½) are not taxable.

In-Service Distributions from 401(k) Plans

host@example.com (Moneta) — Wed, 01 Sep 2010 15:56:30 GMT

401(k) Withdrawals During Employment

Recently, a client sent me an e-mail expressing concern regarding an article that discussed the dramatic increase in 401(k) hardship distributions resulting from the recent economic downturn (http://www.msnbc.msn.com/id/38783832).

Why Refinancing May Possibly Make Sense (Again)?

host@example.com (Moneta) — Tue, 17 Aug 2010 15:09:33 GMT

How many times over the past several years have you heard, “mortgage rates are at historic lows and the time to refinance is now?” We have been flooded by a barrage of recent advertisements promising low mortgage rates making it quite easy to become immune to those claims. In fact, one morning this week on the way to work I heard a radio commercial by a mortgage company indicating that mortgage rates were currently at the lowest point in five decades! And while I was certainly aware that mortgage rates had recently ticked down again, my curiosity was sparked to find out how low we really are relative to history.

What exactly is “Modern Portfolio Theory?”

host@example.com (Moneta) — Fri, 13 Aug 2010 14:42:46 GMT

Who doesn’t want to have the perfect investment with high returns and low risk? Unfortunately, that is a lot easier said than done—in fact, nearly impossible to achieve. Great minds spend a lot of time developing theories and strategies designed to achieve the ultimate investment, but none has been more compelling—or more widely adopted—than Modern Portfolio Theory (MPT).

Anticipating Changes in the Economic Environment: aka Reading a Crystal Ball

host@example.com (Moneta) — Tue, 10 Aug 2010 15:10:44 GMT

Achieving positive investment portfolio returns would be much easier if there were a crystal ball available. Knowing where the interest rates will be next year or buying into the market at the bottom and exactly before a steady upturn would not be just a fairytale. With this kind of magic on hand, an investment strategy would not be necessary.

Charitable Lead Trusts

host@example.com (Moneta) — Fri, 30 Jul 2010 15:44:08 GMT

A charitable lead trust is a type of irrevocable trust that provides an income interest (the ‘lead’ interest) to a charitable organization and the remainder interest to a non-charitable beneficiary (which could be the donor, the donor’s family or other specified individuals).